Personal Finance

How To Get A Debt Consolidation Loan With Fair Credit In Singapore

March 9, 2023

Do you have multiple loans from different lenders, and the monthly installments take a toll on you? Borrowing a debt consolidation loan in Singapore could be the perfect option.

Sometimes, your credit score comes in handy when taking out a loan. Therefore, if your score is fair, you could be wondering how to get a debt consolidation loan with fair credit.

This article will help you understand what a debt consolidation loan is, how it differs from a debt consolidation plan, and how you can use it.

You will also learn how you can apply for one with your fair credit rating and where you can get it.

What Is A Debt Consolidation Loan?

A debt consolidation loan is a personal loan that helps you to amass all your existing loans into a single loan. As a result, you will only be paying one monthly installment.

Also, debt consolidation loans come with lower interest rates than the previous rates you were paying. This eases your financial burden and makes the monthly payments manageable.

However, when looking for this loan type, please do not confuse it with a debt consolidation plan because they differ in several ways.

Debt Consolidation Loan Vs DCP

Debt Consolidation LoanDebt Consolidation Plan
You can combine all your existing loans from multiple lenders into a single loan, including renovation and housing loans.DCP is a financial program that allows you to consolidate your credit cards and some types of unsecured loans. It excludes renovation loans, medical loans, education loans, joint accounts, and business credit facilities.
Singaporeans, permanent residents, and foreigners can apply for loans to consolidate their debt.Only Singaporeans and permanent residents can get a debt consolidation plan in Singapore.
Your loan amount doesn’t matter when borrowing a debt consolidation loan.For a debt consolidation plan, your debts need to be more than 12 times your monthly income.

5 Uses Of A Debt Consolidation Loan

When borrowing a loan from a lender, knowing how you will use it is crucial. You can consolidate these debts with a loan in Singapore:

Personal Loans

Repaying your lenders on time can be difficult if you have multiple personal loans. However, you can consolidate the debt with a loan to avoid defaulting. This loan can cover your payday, bridging, and urgent loans.

Credit Card Loans

Having several credit card loans can lead to overwhelming interest rates. You can consolidate these debts into a personalised loan that you can manage to pay depending on your financial capability.

Joint Accounts

Have you borrowed a loan with your partner or friend which they cannot repay? You don’t have to carry the burden of the monthly installment or late payment fines. You can combine the joint account debt into a single loan with a lower interest rate.

Student Loans

In Singapore, you can take out loans to cater to your studies. Unfortunately, you may not find a job immediately after school, making it difficult to settle your student loans. You can get loans to consolidate your debt from a lender.

Renovation Loans

Renovating your home may be a one-time mission. Therefore, you can take out several renovation loans from different lenders. Instead of paying multiple monthly installments, which can be challenging to keep up with, you can consolidate these loans into one.

How To Get A Debt Consolidation Loan With A Fair Credit

Your credit score influences your ability to get a loan, especially when dealing with a bank. You can have a good, fair, or bad credit rating depending on your loan repayment behavior.

Here are the tips on how to get a debt consolidation loan with fair credit:

Borrow Small Loans

Getting a huge loan with fair credit in Singapore can be challenging. However, you can access smaller loan amounts that can be manageable.

You can take out such loans and repay them quickly to build your credit score. Once you have good credit, you can approach a lender to get a loan to consolidate your existing debts.

Restructure Your Debts

When you have multiple unsecured loans, it affects your credit ratings. Therefore, you can restructure your debts to build the rating that will qualify you for a debt consolidation loan.

For example, you can contact your lenders and request an extension of your repayment period or a lower interest rate. This way, you can cover some of your debts on time, improving your credit score.

Approach A Licensed Money Lender

Most licensed money lenders may not consider your credit rating when borrowing a loan. You can approach such lenders if you are stuck with fair credit and want to consolidate your debts.

Borrow From A Credit Union

Credit unions in Singapore are more flexible non-profit entities than banks. Therefore, they can ignore your fair credit rating and give you a loan.

Since there are several in Singapore, you can compare their debt consolidation loan packages in terms of interest rates, loan amount, and repayment plans.

Pros And Cons

Here are the advantages and disadvantages of loans for consolidating debt:

Pros

  • It gives you a manageable alternative; thus, you can organise your repayment plan.
  • Debt consolidation loans have a lower interest rate than the combined interest of all your existing loans.
  • You can keep track of the repayment dates without forgetting.
  • If you make timely payments, you will improve your credit score.

Cons

  • Like any other loan, you attract late payment fines and late interest rates if you miss out on your monthly payments.

Where And How To Apply

You can approach the following lenders for loans to consolidate debt:

Banks

Banks in Singapore provide different packages for debt consolidation loans. You can weigh the available options to find the best lender.

However, banks have strict eligibility criteria when lending.

Licensed Money Lenders

If you do not meet the banks’ requirements, licensed money lenders help. You don’t have to worry about your safety when dealing with a licensed money lender because it is regulated by the Ministry of Law in Singapore.

Applying For A Loan

The application process is straightforward if you have the required documents. If you are a Singaporean or a permanent resident, provide proof of identity and income.

For foreigners, you should have proof of residence, work permit/ Singpass, and bank statements/ payslips.

You can apply online using your Singpass. All you need to do is to go to a lender’s official website and find the application page. Fill in the required details and attach the necessary documents.

Finding A Debt Consolidation Loan With Fair Credit In Singapore

When you have multiple debts from different lenders, keeping track of the monthly installments can be challenging.

You can get a debt consolidation loan to amass your renovation, student, and credit card loans into one loan.

If your credit score is not excellent but fair, you may be wondering how to get a debt consolidation with fair credit. You can approach a licensed money lender or a credit union. Besides, you can build your credit score first to have a good rating.

If you are looking for a financial expert to help you consolidate your debt into a single loan, GS Credit has you.

We are one of the best licensed money lenders in Singapore, with reasonable loan terms and conditions. You can apply for a loan online from our official website.

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